If you are an agent or agency, make sure you do your homework diligently before you join a premium aggregator aka agency network group. One of the key questions to ask is: “What would happen if and when I decide to sell my agency, especially to an agency that is not a member of your network?” Make sure that you get very logical and understandable answers, in writing of course. Actually, it should be addressed clearly in their membership agreement.
It is also a good idea to make up a few sample scenarios and present them to the network representative, asking for clear answers to cover each situation. Again, get the answers “in writing”, email or whatever covers it for you – in addition to what is stated in the agreement. Think of a few agency sales or mergers in the area, of which you have some basic knowledge. Use them as your examples to present to the representatives. There are many different scenarios that could be involved.
Bottom line, take your time addressing this issue and all the others involved when considering membership in a network.
If you are in need of a list of key questions to ask, get in touch with me and I will provide you with my list – for free.
Phil Tuccy – 941-527-7823 – email@example.com
This week I had an agent tell me that he felt like he was deceived when he tried to leave the agency that had employed him as a producer, for more than five years. He announced to the employing agency principal that he was leaving to go out on his own, as he had a deal to buy a small, existing agency, His next question to the employer was how he could transfer the business he had produced for them, for five-plus years. The agency principal pulled out the agreement that the producer had signed when he was first employed in the agency. It stated that the first full year of the producer’s employment did not count toward fulfillment of his five year qualification requirement. It was considered to be “orientation and training”, although the actual training period seemed to last only a few months, before the producer was turned loose to produce.
So, instead of having satisfied the full five years of vesting, the producer still had a year to go to be able to extract the business for his own purposes. The producer told me that he remembered something about that clause in his agreement but didn’t fully understand the wording and didn’t ask for clarification, before signing the agreement when he was first hired.
He had obviously made a big mistake. The damage was done and now his plan for his own agency is in real jeopardy. He said that he might file a law suit to dispute the validity of the terms but he cannot afford to do so at this time.
The “moral of the story” is of course to make sure you not only read your agreements thoroughly but be sure to get a clear understanding of all the terms. Get a clarifying letter, if you are not sure of any aspect of any agreement. Better yet, ask for some review and clarification help from a third party. You cannot afford to make mistakes like this.
Tip: Some of the State Agent organizations provide contract reviews for their Members.